Nowadays, it’s a rare selloff that isn’t blamed on the growing heft of a strategy called risk parity.
I’m not the only one who thinks the combination of Tesla (TSLA) and SolarCity (SCTY) is “ludicrous“. Aswath Damodaran, a Professor of Finance at NYU and one of the leading experts in corporate valuations, has taken a hard look at the valuation used by the bankers in order to justify the deal and come away outraged at the hijinks of the process.
In fact, it is far easier to make the case for reverse synergy here, since adding a debt-laden company with a questionable operating business (Solar City) to one that has promise but will need cash to deliver seems to be asking for trouble.
Hedge funds that have relied on people to make bets are hiring quants like never before in search of answers to lackluster returns. They’re playing catch-up to firms such as Renaissance Technologies and Two Sigma Investments, among the leaders in using complex mathematical models for investing.
Buffett regularly makes the difficult, sound very easy. His knack for simplifying things, in a way a mass audience can understand, often gives the false impression that investing is easy.“Simple, but not easy” best describes it.Still, his simple messages get misinterpreted often. It leads some people to believe you can do it too without much effort. Others seem to think Buffett has a super secret formula that always spits out winners and he just refuses to share it.If only that were true.